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Shares in AIM-listed governance, risk and compliance software provider Access Intelligence (LSE:ACC) have yet to really spark since I recommended them on t1ps, the website I founded in 2000 and edited until September of this year, in November 2010 at 4.25p. They have traded briefly above 5p since but fell to lows of 2.25p a year ago. They have subsequently recovered somewhat and a material director share purchase announced today sees the shares currently trading more than 11% ahead on the day at a 3.75p share price. The following reviews this further and takes a look at the current investment case…
The announcement is of a 4p per share, £165,000 subscription of new shares by Chief Operating Officer Joanna Arnold. Arnold joined the company in December 2008 as Corporate Development Director and joined its board in December 2010, being promoted to her current role in December 2011. Prior to Access, Arnold was an Investment Manager specialising in technology at Elderstreet Investments Ltd, a venture capital fund manager, where she gained experience in advising start-up and high-growth UK technology businesses. For Access’ year ended 30th November 2011, the company’s annual report shows Arnold’s remuneration was £75,000.
Therefore, this looks a material investment by someone with experience in technology investment and multi-year experience and knowledge of Access’ business. It represents, and means Arnold now holds, 1.78% of the shares in issue, and follows £172,595 of other director share purchases earlier this year (those in the market and including £70,250 by Executive Chairman, Michael Jackson, taking his shareholding to 9.65%) at an average of 3.02p per share. There is thus a good alignment between directors’ and shareholders’ interests here – increased on today’s news and on the back of which investors can still currently buy shares in the market at the same price as Ms Arnold paid.
The new money is to “be used for general working capital purposes”, though the company had £2 million of net cash at its 31st May 2012 half year stage after delivering a small underlying pre-tax profit for that period. However, an increased investment programme helped eat into the company’s cash pile and saw forecasts for the year just commenced slashed at that time – with a profit of £0.5 million now currently anticipated. This means some strong continuing growth is needed from here to justify the present £8.7 million market capitalisation but, from a current base of 68% of revenues being recurring, a significant investment programme well underway and operating in a market which looks to have good growth potential, this certainly looks realistic. The company has not updated on trading since its July announced interims though past form suggests we can expect a year-end trading update mid this month. Ahead of this anticipated update, my stance for now would be ‘hold’ but it is certainly on the radar screens once again.
For a tech stock you really should be buying now from the same Elderstreet stable click HERE
Libertarian investment writer Tom Winnifrith writes extensively for a number of US and UK financial websites. All of that material appears on his own blog, which also carries his extensive original non financial material, at TomWinnifrith.com – for alerts on all Tom’s writings follow him on twitter at @tomwinnifrith
